Engineering Economy

Instructor: Dr. Pablo Biswas

Room: EGC 201 E

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 Your

you

syllabus tells

Website (in process)

Learning objectives
Grading
Quizzes
Tests
Project
Disability statement

few ground rules

Respect
Cell phones
Attendance
Honor Code
Focus

Welcome!
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Think about it
What

factors would influence the

following decisions?
Buying a new car (whether or not to, what
kind, from where, etc.)
Renting vs- buying a house
Going to graduate school or straight into the
job market upon graduation

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Key Phrase: Time Value of Money

Fundamental

Economy

concept of Engineering

The change in the amount of money over a

given time period is called the time value of
money.

Money

makes money.

When borrowing money, over time more is

owed than amount borrowed.
When lending, over time more is received than
the amount loaned.

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Why is Engineering Economy important?

Practical

everyday questions:

Should you finance your car or pay cash?

Finance for $6995 vs- pay $4000 in cash. At
what interest rate would you have to invest the
$4000 so either option is equivalent?
Buying a new car: should you take 0% financing
for the next 4 years, or a $2000 cash rebate?
Buying or renting a house: should you continue
to pay $625 per month in rent or buy a house
for $120,000 at an interest rate of 6%?
What is the economic benefit of going on to
graduate school?
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Why is Engineering Economy important?

As

an Engineer

Engineers tend to work on projects. Projects use

capital (money) to improve a process, develop a
new product, improve a product , improve the
safety of a process, etc
Engineers are typically responsible for writing
the project which determines the cost of the
project and the return on investment.
When doing a project study, Engineers compare
and contrast alternative options for
accomplishing the goals of a project. These
alternative are often compared from an economic
standpoint. (e.g., Lease -vs- Buy, Payback
period, Rate of Return, Return on Investment.)
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